Tuesday, December 20, 2016

Social network could face fine of up to 1% of global turnover in 2014 prompted by privacy policy change for WhatsApp that shared user data with Facebook

The European commission (EC) has filed charges against Facebook for providing “misleading” information in the run-up to the social network’s acquisition of messaging service WhatsApp after its data-sharing change in August.

The charges will not have an affect on the approval of the $22bn merger and is being treated completely separately to other European cases against Facebook, but could lead to Facebook being fined up to 1% of its global turnover in 2014 when the merger was approved, which was greater than $10bn for the first time.

The European competition commissioner, Margrethe Vestager, said: “Companies are obliged to give the commission accurate information during merger investigations. They must take this obligation seriously.

“Our timely and effective review of mergers depends on the accuracy of the information provided by the companies involved. In this specific case, the commission’s preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp. Facebook now has the opportunity to respond.”

The commission said that Facebook informed regulators that it would not be able to perform automated matching between user-held Facebook accounts and WhatsApp accounts. However, Facebook’s privacy policy change for WhatsApp in August, for which the EC was notified in January, specifically enabled automated matching and data sharing after technical changes, including one for Apple and its iOS, allowed the matching of the majority of accounts not using a phone number with Facebook.

The commission’s review of the merger in 2014 revolved around whether Facebook would or could merge the two messaging services, making them cross-compatible; a technically difficult feat that was made harder in 2016 with the roll out of WhatsApp’s end-to-end encryption for messages by default.

Facebook has until 31 January 2017 to respond to the charges.

A Facebook spokesperson said the company was pleased that the EC stands by its clearance of the company’s WhatsApp acquisition and would continue to co-operate with regulators to resolve their complaints. It said: “We respect the commission’s process and are confident that a full review of the facts will confirm Facebook has acted in good faith.

“We’ve consistently provided accurate information about our technical capabilities and plans, including in submissions about the WhatsApp acquisition and in voluntary briefings before WhatsApp’s privacy policy update this year.”

Facebook halted the use of user data shared between WhatsApp and Facebook for advertising purposes in November after pressure from the pan-European data protection agency group Article 29 Working Party in October.